These are then sold as souvenirs to tourists in one of Cambolac’s two shop fronts, or customized and passed on to hotelier resellers. Tourism here is booming. Visitor numbers have risen by more than 10% annually for the past four years.
Like a growing number of business school graduates, Philippe Pauly has sought to create his own business, but he is not just in it for profit and he believes he can make a unique social impact on the Cambodian community.
Half of his company’s 60-strong team is made up of hearing impaired young adults, and others who are from poor communities around Cambodia’s Angkor Park, an ancient stone city.
“The reason why we claim we are a social business is [that] we focus on job creation for vulnerable people,” says Philippe, founder and CEO.
Having been an investment manager looking after funds for wealthy European clients, including at BNP Paribas and Société Générale, Philippe went to the south of France to begin an MBA at IAE Aix Graduate School of Management. It was there that he felt the winds of change.
“It was a turning point for my professional career and my personal life,” says Philippe, with a stern French accent. When he came back to the market as a corporate development officer, he struggled to settle back into his stride. “My mind shifted from being focused on money to being focused on something else. I had to create my own way,” he says.
A backpacking trip to Cambodia four years after graduating, in 2010, presented the opportunity to tap into the tourism market, but also presented the harsh realities of life for the many families living in poor urban areas.
“In the tourist district I saw products imported from different Asian countries,” says Philippe. “[But] still [there were] a lot of poor people here – so why don’t we try to do something [different]?”
Cambolac manufactures and sells high quality souvenirs. A for-profit business, by employing local people Philippe believes it can help to drive social change in a country beset by poverty and corruption.
It is a view shared by many business school students, who he is keen to see join his growing team.
A second social entrepreneur, Haitao Yu, who is from the MSc in sustainable development at HEC Paris, helps to develop strategic plans, as well as manage web development and operational risk.
“It’s a perfect match for me,” says Haitao. “I like to see [that] what I’m doing can create social impact, like jobs for vulnerable people. That’s my main motivation.”
But there are still many challenges Cambolac must overcome. There is a huge lack of human resources from which Philippe can pluck the needed talent to grow the company, he says, while there is also fierce competition from social enterprises which are “over-funded” and thus offer higher salaries for staff.
“It’s very difficult to find good people at reasonable prices,” Philippe says. There is a growing entrepreneurial community in Cambodia but he believes there are many enterprises which are not “real businesses”.
“If you think about social business as a real business with equity owners and not getting any finance outside of equity, I think there are only two social businesses in Cambodia,” he says, bluntly.
Cambolac is backed by international investors but this may be as much to do with a lack of venture capital and angel financing in Cambodia than it is about Philippe’s personal banking connections.
“There’s nothing in Cambodia for financing a start-up company,” says Philippe, whose company raised $200,000.
Yet that does not tell the entire tale. There are a handful of Cambodian fund groups including Leopard Capital, a private equity firm that invests in frontier markets, and Devenco, a venture capital group which focuses on social as well as economic development.
The Leopard Cambodia Fund has raised $34 million since its launch in 2008, and has made 14 investments including a $2 million injection into a Cambodian craft beer brewery.
While small, Cambodia’s economy has been growing at more than 7% annually for the past decade.
Entrepreneurs like Philippe, who says he gets 60% of Cambolac’s revenues from selling directly to tourists, are able to tap a thriving tourism sector.
According to figures compiled by Cambodia’s Ministry of Tourism, the number of international visitors has surged from less than 120,000 in 1993 to more than 4.2 million in 2013. In 2012 and 2013, growth has averaged about 20%.
Receipts from these tourists have risen from about $100 million in the 90s to $2.5 billion last year, according to the ministry.
“The souvenir market is big,” says Philippe. He believes he can capitalize on the increase in the number of international tourists by both utilizing his MBA degree and his experience as a financier in France.
“I was lacking confidence in my ability to start a business by myself,” he says. The MBA helps him manage the uncertainty that is par for the course of doing business in Cambodia. “I have a 360 [degree] view of business that I was lacking before. Before, I was a super technician,” says Philippe.
The next steps for the ambitious entrepreneur are to double revenue in 2015, launch an e-commerce platform, and open a new retail space, adding to the two already in operation.
“Mainly what we [will] do in 2015 is to prepare for internationalization,” Philippe says. “We are around 60 people, and it’s a company we want to grow [to] many hundreds of people. We have financial resources to do this.”
This includes hiring more skilled business developers like Haitao. “My shareholders are pushing me to speed up the development of the company,” he adds.
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